No respite over crude as Iran vows to support Opec oil cut

Published on Saturday 23 February 2008 16:38

IRANIAN oil minister Gholamhossein Nozari last night dashed Western hopes of an increase in oil production, signalling Iran would back a cut at Opec's next meeting in March.

Despite US crude oil prices hitting a record high of US$101.32 on Wednesday, remarks posted on the Iranian Oil Ministry website, Shana, showed Iran did not intend to give in to entreaties from Western consumer nations to boost supply.

Nozari said Iran will support a decrease in output and he expected the 12 other Opec nations to do the same when they meet next month.

"Iran will support the policy of cutting output in Opec's next meeting… It is expected that Opec will (decide to] cut its production at the upcoming meeting," he was quoted as saying.

Nazari went on to add that it was normal for Opec to reduce supply in the spring when warmer weather leads to a drop in demand.

Other Iranian officials have said that last week's record prices were fuelled by speculation and not a shortage of supply.

Iran expects higher-than-normal temperatures in the northern hemisphere at the moment will weaken demand. Venezuelan president Hugo Chavez also signalled on Friday that a production cut was on the cards.

He said during a televised address that US$100-a-barrel prices were "fair" and he expected them to remain close to that level.

"We will do everything that must be done within Opec to continue strengthening the price of our oil," he warned.

Venezuela is one of the leading hawks within the Opec group of oil-producing nations, and regularly votes in favour of production cuts.

The price of oil closed at US$99 a barrel on Friday in New York while London Brent crude prices were at $97.01 a barrel at the close of trading.

Oil prices have averaged US$93.02 a barrel this year, up nearly a third on last year's average of US$72.30.